Top 10 tips on surviving an economic crisis

Apr 4, 2012

Since the past couple of years it has been a regular trend which the financial viz, capital markets have demonstrated i.e., the sudden crash of the financial market. This leaves the investor an avid observer as he can hardly do anything about it. This also makes the investor to embark upon the different options to attain stability while the market crashes.

Let us discuss some useful tips that you may follow during such a scenario:

A general trend followed by banks in 2007 was the loans granted by one bank to the other for a period extending one week or less or even overnight. These loans were made at interbank rate (also overnight rate if the loan period is overnight). This phenomenon was known as inter-bank credit and the market as inter-bank lending market. Whenever a bank loses it potential to run properly due to the lack of assets for liquidity, it requires cash flow for its sustainability. And this leads to low transaction volumes within different banks.However, there are banks like the UAE local bank or HSBC in UAE which have unlimited state guarantees on all deposits, and it acts as a safe haven during the financial crisis.

It is has been noticed that the exchange rate for the US dollar has improved quite significantly and this allows you to trade in US currency and expect good returns.

While investing in shares, shop wisely, as cheap shares have a history of falling prices globally.

Investing in gold and other precious metals may provide you with outstanding returns, more than what you might have anticipated.

Keep a close watch at the regular market values of the shares’ you’ve invested in. And if you’ve a financial advisor to look after your shares, make sure you don’t pay them huge fees for a falling share.

While buying shares, the market value of a global equity needs special attention, especially during the recession period, as they take longer duration to recover. On the other hand, the local shares recuperate at a faster pace.

If you’re looking to invest in a pension fund, make sure you do not jump into it during a financial crisis. Once the crisis period is over, you can invest in such funds and also expect good returns.

Are you indebted to a firm for a specific sum of money? Then do not wait for the repayment of your debt, as the longer you decide to pull out of your debt, the more money you end up paying towards the initial sum.

If you are working in the Middle East, the forecast says that you’re more likely to sustain during the next two years, even though the entire global market is undergoing the crisis.

Savings always provide you with new avenues to come out of a critical situation. Therefore keep your savings aside, even when you’ve your asset prices showing deflation.